Friday, September 4, 2009

5 Readings in Management

Comp Exam Review Module Six: Readings in Management

1. Evaluate whether corporations have a responsibility to society that extends beyond maximizing profit. Essay on 10.25.08 and on 11.15.08.

 

 

 

Three arguments that corporations do have a responsibility beyond maximizing profits

 

Stakeholder Theory – managers ought to serve the interests of all those who have a stake in the firm.

 

(Robert D. Hay and Edmund R. Gray)

 

 

Three arguments that corporations do not have a responsibility beyond maximizing profits

 

Shareholder Theory – managers ought to serve the interests of the firm’s owners.

 

(Alexei M. Marcoux)

 

 

Based on the logical assumption that a  firm is a creation of society, it has a responsibility to aid in the accomplishment of society’s goals.

 

 

 

Social obligations of the firm should be limited to making good on contracts, obeying the law, and adhering to ordinary moral expectations because stakeholder-oriented management undermines shareholder property rights by denigrating and discouraging equity investment.

 

 

Since corporations are the source of many problems in society – pollution, corruption, discrimination, etc. – they should be required to resolve these problems.

 

 

 

Firms should not be obligated to give something back to those whom they routinely give so much already. They pay their employees’ wages and benefits for the labor they provide. They provide a good or service for the revenues they receive. They pay their part of taxes and obey the laws.

 

 

Organizations frequently have financial resources and, therefore, are in a position to use the money for social good and not only for increasing the power and wealth of the firm.

 

 

 

The corporate boardroom would be transformed from a forum in which economically rational strategies are adopted in pursuit of added value into one in which bureaucratic political maneuvering would be the order of the day.

 

 


2. Evaluate whether the corporate strategy of downsizing is unethical. Essay on 10.25.08 and on 11.08.08.

 

 

 

Three arguments that downsizing is unethical

 

(Larry Goss)

 

 

Three arguments that downsizing is not unethical

 

(Joseph T. Gilbert)

 

 

Downsizing violates the psychological and social contracts implicit in the employer-employee relationship since there is an implied sense of job security afforded the employee as long as he or she is productively advancing the goals of the organization.

 

 

Employees expect that all parties will honor their explicit and implicit obligations.

 

 

The RIGHTS AND DUTIES approach deals with the question of whether an employee has a legal right to his or her job.

 

With some few exceptions, U.S. employees do not have legal rights to keep their jobs just because they perform well or because of their status within the company.

 

 

Most organizations deteriorate in terms of predownsizing level of quality, productivity, effectiveness, conflict, low morale, loss of trust, rigidity, scapegoating.

 

 

Organizations that undergo downsizing do not appear to be better off than they were before they implemented the process.

 

 

In the JUSTICE AND FAIRNESS approach a decision to downsize can seem to be the best, or even the only one, available to save, to change, or to improve the company.

 

Improving the company in the marketplace is the responsibility of the manager to the shareholders.

 

 

Downsizing is purely a market-driven decision that can only capture a short-term benefit without regard for the viability of the organization in the environment in which it operates.

 

The short-term advantages of downsizing only benefit a very small segment of the organization.

 

 

The UTILITARIANISM approach considers that downsizing is the greater good that will come to a larger number of people, and is justified by an analysis of the whole situation.

 

Further justification can be found in the good for the shareholders and others who would be hurt by a company’s diminishing presence in the market place.

 

 

 

 

 

 

 

 

 

 


3. Evaluate whether diversity in the workplace is a worthwhile goal for corporations. Essay on 11.01.08 and on 11.15.08.

 

 

 

Three arguments that diversity is a worthwhile goal

 

(Nancy Lockwood)

 

Three arguments that diversity is not a worthwhile goal

 

(Roger Clegg)

 

 

Talent shortages can be addressed by actively recruiting, hiring, and training minorities and females.

 

Firms that intentionally discriminate are reducing the size of the talent pool from which they could recruit.

 

 

Maintaining a diverse workplace is corporate self-defense masquerading as positive public relations because failure to embrace such initiatives is likely to result in lawsuits, legal harassment, increased governmental intervention and regulations, and social and political pressure.

 

 

Diversity-embracing organizations enjoy larger market share since they will have access to a potentially larger customer base.

 

 

Over the course of time, such beneficial outcomes will translate into increased levels of employee productivity and organizational profitability.

 

 

The belief of worthwhile diversity presupposes that blacks/whites, males/females, natives/foreigners are so different in how they think and behave in the workplace that these differences justify deliberate racial and ethnic discrimination in order to ensure a racial and ethnic mix.

 

 

Diverse work groups tend to produce more decision alternatives as well as providing a wider range of creative solutions than do homogenous groups.

 

 

The additional costs – usually in terms of time and money expenditures – incurred by diverse groups trying to reach consensus can far outweigh the benefits provided by their membership diversity.

 

It has not been unequivocally established by research that diversity, in and of itself, results in higher levels of production.

 

 

Workplace diversity can be viewed as having both direct and indirect links to the bottom line.

 

 

Many firms support workplace diversity primarily out of fear.

 

 

 

 

 

 

 


4.Evaluate whether Sarbanes-Oxley is an effective way to achieve meaningful reform in corporation governance. Essay on 11.15.08.

 

 

 

Three arguments that the act is an effective way to achieve such reform

 

(Federal News Service)

 

Three arguments that the act is not an effective way to achieve such reform

 

(Alan Reynolds)

 

 

This legislation was necessary in restoring public confidence in the nation's capital markets by strengthening corporate accounting controls.

 

By establishing the Public Company Accounting Oversight Board, this act will ensure accounting and auditor integrity.

 

 

It is unnecessary because the SEC had ample authority to oversee, investigate, and enforce honest accounting and auditing.

 

 

 

This act has 11 titles with specific mandates and requirements to ensure corporate governance.

 

A Harris poll taken in early 2004 found that 59 percent feel the act will help protect their stock investments, while 57 percent indicate that they would be very unlikely to invest in a company that did not comply with the provisions of the act.

 

 

It is harmful because it greatly increases the costs and risks of doing business as a publicly traded U.S. corporation (higher costs of regulatory compliance, greater expenses for insurance and directors’ compensation) and increases the risks of serving as a director or officer (being overly timid, afraid to make bold investments).

 

 

 

The market drop is tied to a series of high-profile scandals involving corporate officials misleading investors in order to line their own pockets and some accountants looking the other way.

 

 

This legislation reflects the determination to see that the confidence of investors in our capital markets are restored. For when trust is lost, the markets falter, with serious consequences for our economy.

 

 

It is inadequate because it failed to encourage the development of institutions and incentives (including an excessive incentive to retain earnings before the individual tax on dividends was reduced) to improve corporate governance over the long haul.

 

 

 

The free market system relies primarily on trust and full and accurate disclosures. Those tenets had been violated.

 

 

This reform was developed because of a few bad companies. Now every company is going to feel the wrath of this legislation.

 


5. Evaluate whether U.S. corporations should be allowed to hire illegal aliens. Essay on 10.25.08 and on 11.08.08.

 

Three arguments in favor of such hiring practices

 

(Rob Paral)

 

Three arguments against this practice

 

(Fred Dickey)

 

Research has established that immigrants and natives frequently do not compete for the same jobs. In areas where demand for labor is high relative to supply, hiring immigrants results in a complementary outcome rather than a competitive situation.

 

Illegal aliens are willing to do the jobs that natives are not willing to do.

 

The United States has long depended on immigrants (legal and illegal) to compensate for shortfalls in the native-born labor force.

 

 

Because illegal aliens have no bargaining power, the wages for the unskilled jobs are driven down.

 

Their presence makes our own poor more destitute, creating Third World chaos in the economy.

 

Firms that hire illegal aliens are effectively displacing legitimate American employees.

 

 

Many employers have found that there is a large degree of overlap between the characteristics of an individual willing to accept the risks and dangers of relocating to a foreign land in order to make a better life for himself and the characteristics of a loyal, dependable, and driven employee.

 

 

Allowing corporations to hire illegal aliens is forcing the otherwise honest businesses to do as the illegal’s do (cash only, hiring of illegals) so they themselves can compete for and stay in business thereby compounding the problem.

 

 

Illegal aliens contribute to our economy in ways beyond their physical labor; as a group, they contribute billions of dollars to Social Security through payroll taxes. However, owing to fears of being caught and deported, few actually collect payments, thus providing Social Security program with a huge net gain.

 

 

Illegal immigration has a negative impact on the economy particularly in the area of taxes. State lose billions of dollars each year in the form of unpaid taxes while they are faced with growing demands for governmental services driven by the increase in their populations, much of which is the result of illegal immigration.

 

States have to raise taxes to meet these needs; thus, the law-abiding American citizens foot the bill for the illegal immigrants.

 

 


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